Asian Economic and Financial Review

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Online ISSN: 2222-6737
Print ISSN: 2305-2147
Total Citation: 1219

No.1

Study on the Effect of Affecting Factors on the Stone Export Performance in Lorestan Province


Pages: 179-193
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Study on the Effect of Affecting Factors on the Stone Export Performance in Lorestan Province

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DOI: 10.18488/journal.aefr/2015.5.1/102.1.179.193


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Reza Sepavand --- Seyed Najmedin Mousavi --- Davoud Padervand 
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Reza Sepavand --- Seyed Najmedin Mousavi --- Davoud Padervand  (2015). Study on the Effect of Affecting Factors on the Stone Export Performance in Lorestan Province. Asian Economic and Financial Review, 5(1): 179-193. DOI: 10.18488/journal.aefr/2015.5.1/102.1.179.193
The main purpose of this research is to study the effect of affecting factors on  the stone export performance in Lorestan province. Based on its purpose, it is an applied research and based on the method of data collection, it is a descriptive and correlative one. Statistical population of the research is 552 managers and staff of different organizations of Khorramabad: organization of industry, mine, and trade, organization of cooperation, labor, and social welfare, chamber of commerce. By the use of Kokaran formula, the statistical sampling volume changed into 226 persons through stratified random sampling. For collecting data, we used researcher-made questionnaires. For measuring data reliability, we used Cronbach alpha which is equal to 0.83. Also, in order to determine the reliability, we used the confirmatory factor analysis. Based on the confidence level of 0.95, research results showed that the following factors have positive effects on the stone export performance of Lorestan: size of company, export experience, foreign buyers, pricing, export channels, advertising, intensity of competition, technology, quality, packing, and brand. Also, state obstacles have negative effects on the stone export performance of Lorestan.
Contribution/ Originality
In this study, Companies information have risen to the affecting factors on the stone export performance.
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Corporate Governance in Zimbabwe: An Overview of Its Current State


Pages: 167-178
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Corporate Governance in Zimbabwe: An Overview of Its Current State

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DOI: 10.18488/journal.aefr/2015.5.1/102.1.167.178


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Alexander Maune
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Alexander Maune (2015). Corporate Governance in Zimbabwe: An Overview of Its Current State. Asian Economic and Financial Review, 5(1): 167-178. DOI: 10.18488/journal.aefr/2015.5.1/102.1.167.178
This article aims to provide an overview of the current state of corporate governance in Zimbabwe. Corporate governance has gained relevance and prominence in the global society since the big corporate scandals such as Enron and Worldcom. This article is qualitative in nature. Document analysis of relevant literature formulated the discussions. The findings show that Zimbabwe remains amongst a few countries that do not have a national code of corporate governance. However, corporate governance practice in Zimbabwe is regulated by the Companies Act, Zimbabwe Stock Exchange Act as well as rules of various other professional bodies. This article provides an insight into the current practice of corporate governance in Zimbabwe and will help to assist in determining future initiatives.
Contribution/ Originality
This article primarily provides an insight of the current practice and status of corporate governance in Zimbabwe. This article will go a long way in influencing corporate governance related policies in Zimbabwe as well as triggering debates. This article is also of academic value in the field of corporate governance.
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Spirituality and Leaders Effectiveness: An Islamic Perspective


Pages: 155-166
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Spirituality and Leaders Effectiveness: An Islamic Perspective

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DOI: 10.18488/journal.aefr/2015.5.1/102.1.155.166


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Gholamreza Zandi --- Mohamed Sulaiman --- Nayal Rashed 
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Gholamreza Zandi --- Mohamed Sulaiman --- Nayal Rashed  (2015). Spirituality and Leaders Effectiveness: An Islamic Perspective. Asian Economic and Financial Review, 5(1): 155-166. DOI: 10.18488/journal.aefr/2015.5.1/102.1.155.166
This research was conducted to bring to light leadership concepts from the Qur’an. Religious elements, especially from the Qur?an have been ignored as a source of knowledge despite decades of ongoing inquiry and increasing interest. Based on the characteristics of the Motaqeen according to the Qur?an, the concept of Taqwa has been operationalized as having two distinct components, Spirituality and Responsibility. This study attempts to examine the relationship between the first instance spirituality, and leader?s effectiveness. The research utilized a cross-sectional field study in which spirituality was a self-constructed measurement while leadership effectiveness was constructed based on already established scales in the literature. Multiple regression and hierarchal regression techniques using SPSS were used to test the hypotheses. More than 200 companies were sampled. The results show that the leaders? effectiveness is influenced by the leaders? level of spirituality where one element of Spirituality, Belief, was found to predicate business leadership effectiveness. In light of the findings of the present research several recommendations are made to improve the Spirituality of leaders within organizational culture.
Contribution/ Originality

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Empirical Testing of Exchange Rate and Interest Rate Transmission Channels in China


Pages: 145-154
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Empirical Testing of Exchange Rate and Interest Rate Transmission Channels in China

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DOI: 10.18488/journal.aefr/2015.5.1/102.1.145.154


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Ching-Chun Wei --- Tzu-Wei Chuang 
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Ching-Chun Wei --- Tzu-Wei Chuang  (2015). Empirical Testing of Exchange Rate and Interest Rate Transmission Channels in China. Asian Economic and Financial Review, 5(1): 145-154. DOI: 10.18488/journal.aefr/2015.5.1/102.1.145.154
This paper examines the exchange rate and interest rate volatility transmission channels in China by applying Granger causality, Johansen cointegration, and the VAR model. Empirical results taken from the exchange rate channel favor the exchange rate and the Shanghai composite index return volatility pass-through in imports and exports; those taken from the interest rate channel favor the deposit and lending rates as well as the Shanghai composite index return volatility pass-through in PPI. Our empirical evidence supports the presence of exchange rate and interest rate transmission channels in China. By manipulating the exchange rate and through its monetary policy, the China government can cool down the country?s overheating economy.
Contribution/ Originality
The contribution of this paper by applying Granger causality, Johansen cointegration, and VAR model to examine the exchange rate and interest rate volatility transmission channels in China. Our empirical evidence supports the presence of exchange rate and interest rate transmission channels in China.
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  7. Sun, L., J.L. Ford and D.G. Dickinson, 2010. Bank loans and the effects of monetary policy in China: VAR/VECM approach. China Economic Review, 21(1): 65-97.

An Analysis for Credit Rating and Momentum Strategy


Pages: 127-144
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An Analysis for Credit Rating and Momentum Strategy

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Mu-Lan Wang --- Ching-Ping Wang --- Shiang-Yi Lee 
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Mu-Lan Wang --- Ching-Ping Wang --- Shiang-Yi Lee  (2015). An Analysis for Credit Rating and Momentum Strategy. Asian Economic and Financial Review, 5(1): 127-144. DOI: 10.18488/journal.aefr/2015.5.1/102.1.127.144
In recent years, investors are increasingly concerned about whether the credit risk will affect the return on investment. This paper discusses the credit rating and momentum investment strategy relationship. The research period is from January 2005 to December 2010, and the sample is the ordinary shares of companies listed on Taiwan Stock Exchange (TSE). By calculating the cumulative returns of the investment portfolio of the holding period, and grouping the research samples by credit rating, this paper tests the relationship between credit rating and momentum investment strategy in Taiwan?s stock market. Second, in the exploration of the factors affecting credit rating and stock returns, this paper uses variables including firm size, financial leverage, turnover rate, company age and industry to analyze the impact of factors including information asymmetry and industry on the investment strategy. Moreover, this paper probes into the impact of January Effect and business cycle on credit rating. The empirical results reveal that Taiwan?s stock market does not have the momentum effect, although there is reverse investment strategy. In other words, the returns of stocks of investment portfolio of better credit rating are higher than those of poorer credit rating; and the results are reverse if the reverse investment strategy is applied. The empirical results are not affected by adding variables such as firm size, financial leverage, turnover rate, company age and industry. Hence, momentum investment strategy of Taiwan?s stock market is not affected by credit rating. 
Contribution/ Originality
This study has been provided to investors as a decision making according to Taiwan’s information. For testing the relationship between credit rating and momentum investment strategy in Taiwan’s stock market. The returns of stocks of investment portfolio of better credit rating are higher than those of poorer credit rating; The momentum investment strategy of Taiwan’s stock market is not affected by credit rating.
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Public Debt and Economic Growth in Malaysia


Pages: 119-126
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Public Debt and Economic Growth in Malaysia

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Siew-Peng Lee --- Yan-Ling Ng 
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Siew-Peng Lee --- Yan-Ling Ng (2015). Public Debt and Economic Growth in Malaysia. Asian Economic and Financial Review, 5(1): 119-126. DOI: 10.18488/journal.aefr/2015.5.1/102.1.119.126
Public debt in the Malaysia increased because of fiscal expansions. This study examines whether public debt contributed to the economic growth in Malaysia over the period 1991 to 2013. It also examines whether other indicators of debt burden, such as budget deficit, budget expenditure, and external debt service and government consumption, have an impact on economic growth. The results of this study are consistent with the existing literature that found a negative association between diet and growth. The results indicate that public debt over time has a negative impact on GDP. In addition, it is found that the budget deficit, government consumption and external debt service are a decreasing function of GDP. 
Contribution/ Originality
Our paper aims at contributing to the debate on the relationship between public debt and economic growth. To the best of our knowledge, only a few and inconclusive studies focus on external debt for Malaysia’s economic growth. It may be worthwhile to examine the impact of public debt on the economic in Malaysia to provide out-of-sample evidence in related works. The results of this study would be an important input to local policy makers concerning the role in monitoring public debt position.
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The Effect of Trade, Specialization and Financial Integration on Business Cycles Synchronization in Some Mediterranean Countries


Pages: 110-118
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The Effect of Trade, Specialization and Financial Integration on Business Cycles Synchronization in Some Mediterranean Countries

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DOI: 10.18488/journal.aefr/2015.5.1/102.1.110.118


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Nabil Alimi 
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Nabil Alimi  (2015). The Effect of Trade, Specialization and Financial Integration on Business Cycles Synchronization in Some Mediterranean Countries. Asian Economic and Financial Review, 5(1): 110-118. DOI: 10.18488/journal.aefr/2015.5.1/102.1.110.118
The aim of this paper is to study if bilateral trade, similarity of specialization and capital flows between some Mediterranean countries (Egypt, Morocco, Tunisia and Turkey) and their main European partners (Germany, France and Italy) have an impact on Business cycles synchronization. Using the system Generalized Method of Moments (GMM) for dynamic panel over the period of 1980 to 2010, the study found a positive relationship between bilateral trade and similarity of specialization on one hand and business cycle correlation on the other hand. However, financial flows remain without significant effect on business cycle synchronization.
Contribution/ Originality
The paper contributes the first logical analysis of the effect of commercial and financial flows and specialization on the business cycles synchronization between some Mediterranean countries and the principal European Union countries.  
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Gender and Spatial Educational Attainment Gaps in Turkey


Pages: 102-109
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Gender and Spatial Educational Attainment Gaps in Turkey

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DOI: 10.18488/journal.aefr/2015.5.1/102.1.102.109


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Edward Nissan --- Farhang Niroomand 
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Edward Nissan --- Farhang Niroomand  (2015). Gender and Spatial Educational Attainment Gaps in Turkey. Asian Economic and Financial Review, 5(1): 102-109. DOI: 10.18488/journal.aefr/2015.5.1/102.1.102.109
This paper aims to investigate differences and similarities between and among the seven regions as well as the developed and the less developed provinces in Turkey for their gender gaps in educational attainment of the labor force. The study uses analysis of variance techniques to test equality of means between the regions and the provinces for the census period 1970 to 2000. The purpose is to determine whether gender gaps narrowed or expanded. The statistical tests rejected equality of the means for the six census periods for the seven regions and for the provinces. Multiple comparison procedures showed that changes in the means needed about a decade to materialize.
Contribution/ Originality
This study contributes to the existing literature of gender gaps in education in developing countries. The paper substantiates the findings of other studies in that cultural and institutional differences do prevail in the treatment of women. In Turkey, for instance, the ratio of education of women to men is less than one, approaching one as the economy developed.
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Evaluation of Particle Swarm Algorithm and Genetic Algorithms Performance at Optimal Portfolio Selection


Pages: 88-101
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Evaluation of Particle Swarm Algorithm and Genetic Algorithms Performance at Optimal Portfolio Selection

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Mansour Zarranezhad --- Reza Yousefi Hajiabad --- Maryam Fakherinia 
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Mansour Zarranezhad --- Reza Yousefi Hajiabad --- Maryam Fakherinia  (2015). Evaluation of Particle Swarm Algorithm and Genetic Algorithms Performance at Optimal Portfolio Selection. Asian Economic and Financial Review, 5(1): 88-101. DOI: 10.18488/journal.aefr/2015.5.1/102.1.88.101
This research aims to evaluate the optimum portfolio selection using with particle swarm algorithm and genetic algorithm. For this purpose, the financial information of companies listed on the Iran stock exchange, during years 2007 to 2012 is collected and using heuristic particle swarm algorithm, genetic algorithms and based on Markowitz model, mean-variance model and client risk model, generating optimal portfolio from the stocks has been investigated. In total, the results of this study showed that use of these algorithms can provide solutions both close together and close to optimality, and causes confidence of the investors? investment for making decisions. Also, based on the response obtained by performing several experiments it can be claimed that in Markowitz and mean-variance models can provide most optilam portfolio. In other hands, particle swarm algorithm is best in client risk model. Most observations reflect the fact that in the problems which are smaller and lighter the genetic algorithm, and as the complexity and size increases, the particle swarm algorithm perform better.
Contribution/ Originality

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Corruption and Political View Point of the Governments in Transition Countries EU Members


Pages: 73-87
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Corruption and Political View Point of the Governments in Transition Countries EU Members

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DOI: 10.18488/journal.aefr/2015.5.1/102.1.73.87


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Damir Piplica 
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Damir Piplica  (2015). Corruption and Political View Point of the Governments in Transition Countries EU Members. Asian Economic and Financial Review, 5(1): 73-87. DOI: 10.18488/journal.aefr/2015.5.1/102.1.73.87
In achieving their goals in conducting measures of their economic policy, governments of transition countries EU members, should realize the importance of suppressing the phenomenon of corruption in economy, especially in regard of reducing the unemployment rate rather than reducing the inflation rate; regardless of the fact if they are constituted of left- or right-wing parties. Should the right-wing governments firmly follow their political viewpoint, and at the same time they would want to reduce the unemployment together with reducing the inflation rate, than they should put bigger ponder on reducing the corruption than it is usually done by left-wing governments. However, if the right-wing parties should opportunistically turn to centre-oriented voters, than to follow their own ideological program, that would enable slightly easier position in suppression of unemployment, due to slightly smaller impact of the corruption. Opportunistic turning to centre-oriented voters would create slightly more difficult position to left-wing governments, who would easier suppress the unemployment if they followed their left-oriented program, due to smaller impact of the corruption. On the other hand, more opportunistic and less ideological behaviour of left- and right-wing parties would not create difficulties in achieving of the economic-monetary goal of keeping lower inflation rate. Right-wing governments in Croatia should especially aim to suppress the corruption, in order to down size the unemployment, by implementing all of economic policy measures. Political parties that would not consider quality of their policy resulting with wanted economic goals can lose their credibility, and at the same time the stability of their electoral body.
Contribution/ Originality
This study is one of very few studies which have investigated corruption and its impact to unemployment and inflation, depending on the fact if current government is constituted by left- or right-oriented party in transition countries EU members. The research enriches existing theoretical evaluations, having its foundation in ’partisan theory’.
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What is About Wages in the Czech Education and Healthcare Sectors Before, during and after the Global Economic Recession?


Pages: 58-72
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What is About Wages in the Czech Education and Healthcare Sectors Before, during and after the Global Economic Recession?

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Diana Bilkova
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Diana Bilkova (2015). What is About Wages in the Czech Education and Healthcare Sectors Before, during and after the Global Economic Recession?. Asian Economic and Financial Review, 5(1): 58-72. DOI: 10.18488/journal.aefr/2015.5.1/102.1.58.72
Wages in the Czech education and healthcare sectors have been a widely debated issue. The present paper deals with the wage development in the above two areas compared to that on the national scale before, during and after the global recession, focusing on recent earnings of Czech teaching and medical staff. Since the income of the latter is notably affected by overtime pay, the structure of wages in the health service sector is given proper attention. The development of the wage levels and concentrations in both the sectors and their comparison with those in other areas is also considered, the professions with the lowest and highest earnings being highlighted.
Contribution/ Originality
This study contributes in the existing literature in terms of the impact of the global economic crisis on living standard level in two very discussed sectors e.g. education and health sectors in the Czech Republic. This study uses new estimation methodology, namely the method of L-moments of parametric estimation, which was used in construction of the wage models. This study is one of very few studies which have investigated in new modern methods of parametric estimation using L-moments.
  1. Bartošová, J., 2006. Logarithmic-normal model of income distribution in the Czech republic. Austrian Journal of Statistics, 35(23): 215-222.
  2. Behr, A., 2007. A European analysis of changes in gender specific wage inequality using decomposition methods. Journal of Income Distribution, 16(1): 50-73.
  3. Dagum, C., 1997. A systemic approach to the generation of income distribution models. Journal of Income Distribution, 6(1): 105-126.
  4. Dagum, C., 1999. Advances in econometrics, income distribution and scientific methodology. New York: Physica-Verlag.
  5. Franta, M., B. Saxa and K. Šmídková, 2010. The role of inflation persistence in the inflation process in the new EU member states. Finance a Uv?r, 60(6): 480-500.
  6. Hosking, J.R.M. and J.R. Wallis, 1997. Regional frequency analysis: An approach based on L-moments. 1st Edn., Cambridge University Press.
  7. Kaasa, A., 2006. Factors of income inequality and their influence mechanisms: A review of the empirical literature. Journal of Income Distribution, 15(1): 9-41.
  8. Malá, I., 2013. The use of finite mixtures of lognormal distribution for the modelling of household income distributions in the Czech republic. Politická Ekonomie, 61(3): 356?372.
  9. Mallick, S.K., 2008. Income distribution and consumption deprivation: An analytical link. Journal of Income Distribution, 17(2): 25-36.
  10. Marek, L., 2010. The trend of wage distributions in Czech republic in the years 1995-2008 analysis. Politická Ekonomie, 58(2): 186-206.
  11. Monti, M. and A. Santoro, 2009. A note on between-group inequality with an application to households. Journal of Income Distribution, 18(3-4): 49-62.
  12. Rothschild, K.W., 2005. Employment, wages and income distribution: Critical essays in economics. New York: Routledge.
  13. Triola, M.F., 2003. Elementary statistics. 9th Edn., Boston: Addison Wesley.
  14. Wessels, W.J., 2008. A consumption model of income inequality. Journal of Income Distribution, 17(2): 5-24.
  15. Wolff, E.N., 2009. Poverty and income distribution. 2nd Edn., West Sussex: Wiley-Blackwell.

Qualified Audit Opinion, Accounting Earnings Management and Real Earnings Management: Evidence from Iran


Pages: 46-57
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Qualified Audit Opinion, Accounting Earnings Management and Real Earnings Management: Evidence from Iran

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DOI: 10.18488/journal.aefr/2015.5.1/102.1.46.57


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Akhgar M. Omid 
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Akhgar M. Omid  (2015). Qualified Audit Opinion, Accounting Earnings Management and Real Earnings Management: Evidence from Iran. Asian Economic and Financial Review, 5(1): 46-57. DOI: 10.18488/journal.aefr/2015.5.1/102.1.46.57
This study examines the relationship between qualified audit opinions and earnings management, as measured by discretionary accruals (accounting earnings management) and abnormal production cost (real earnings management), for listed firms on the Tehran Stock Exchange (TSE). For this purpose, four hypotheses are developed and tested by using multiple regressions and sample of 2818 firm-years. The results show that qualified opinions are related to accounting earnings management but are not related to real earnings management. Client financial characteristics, such as profitability, size, experience, type of audit opinion in previous year and prior year loss are determinants of the qualified audit opinion decision.
Contribution/ Originality
This study is one of very few studies which have investigated relationship between qualified audit opinions, accounting earnings management and real earnings management.
  1. Akhgar, M.O., P. Khalili and J. Mohammadi, 2012a. Type of earnings management and the effects of firm size, deviation in operating activities and sales growth: Evidence from Iran. European Journal of Economics, Finance and Administrative Sciences, 55: 61-71.
  2. Akhgar, M.O., P. Khalili and J. Mohammadi, 2012b. Type of earnings management and the effects of debt contracts, future earnings growth forecast and sales growth: Evidence from Iran. International Research Journal of Finance and Economics, 101: 132-142.
  3. Arnedo, L., F. Lizarraga and S. Sanchez, 2008. Discretionary accruals and auditor behavior in code-law contexts: An application to failing Spanish firms. European Accounting Review, 17(4): 641–666.
  4. Bartov, E., F.A. Gul and J.S.L. Tsui, 2001. Discretionary-accruals models and audit qualifications. Journal of Accounting and Economics, 30(3): 421–452.
  5. Boone, J.P., I.K. Khurana and K.K. Raman, 2010. Do the big 4 and the second-tier firms provide audits of similar quality? Journal of Accounting and Public Policy, 29(4): 330–352.
  6. Butler, M., A.J. Leone and M. Willenborg, 2004. An empirical analysis of auditor reporting and its association with abnormal accruals. Journal of Accounting and Economics, 37(2): 139–165.
  7. Carcello, J.V. and T.L. Neal, 2000. Audit committee composition and auditor reporting. Accounting Review, 75: 453–467.
  8. Carey, P. and R. Simnett, 2006. Audit partner tenure and audit quality. Accounting Review, 81(13): 653–676.
  9. Charitou, A., N. Lambertides and L. Trigeorgis, 2007. Earnings behavior of financially distressed firms: The role of institutional ownership. Abacus, 43(3): 271–296.
  10. Cohen, D.A. and P. Zarowin, 2010. Accrual-based and real earnings management activities around seasoned equity offerings. Journal of Accounting and Economics, 50: 2–19.
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  12. Francis, J.R. and J. Krishnan, 1999. Accounting accruals and auditor reporting conservatism. Contemporary Accounting Research, 16(1): 135–165.
  13. Graham, J.R., C.R. Harvey and S. Rajgopal, 2005. The economic implications of corporate financial reporting. Journal of Accounting and Economics, 40: 3–73.
  14. Gunny, K., 2005. What are the consequences of real earnings management? Working Paper, University of Colorado.
  15. Herbohn, K. and V. Ragunathan, 2008. Auditor reporting and earnings management: Some additional evidence. Accounting and Finance, 48: 575–601.
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  19. Ronen, J. and L. Varda Yaari, 2008. Earnings management: Emerging insights in theory, practice, and research. Springer.
  20. Roychowdhury, S., 2006. Earnings management through real activities manipulation. Journal of Accounting and Economics, 42: 335–370.
  21. Sengupta, P. and M. Shen, 2007. Can accruals quality explain auditors’ decision making? The impact of accruals quality on audit fees, going concern opinions and auditor change. Available from http://ssrn.com/abstract=1178282 [Accessed 15.04.2012].
  22. Tsipouridou, G. and C. Spathis, 2014. Audit opinion and earnings management: Evidence from Greece. Accounting Forum, 38: 38– 54.
  23. Zang, A., 2006. Evidence on the tradeoff between real manipulation and accrual manipulation. Working Paper, University of Rochester.

Liquidity and Returns: Evidences from Stock Indexes around the World


Pages: 33-45
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Liquidity and Returns: Evidences from Stock Indexes around the World

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DOI: 10.18488/journal.aefr/2015.5.1/102.1.33.45


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Kenas Revanda Hartian --- Romora Edward Sitorus 
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Kenas Revanda Hartian --- Romora Edward Sitorus  (2015). Liquidity and Returns: Evidences from Stock Indexes around the World. Asian Economic and Financial Review, 5(1): 33-45. DOI: 10.18488/journal.aefr/2015.5.1/102.1.33.45
Using data from 16 developing countries and 10 developed countries between January 2000 and December 2013, this study examines the relationship between liquidity and stock index return. The empirical results show that the higher market liquidity (trading volume, turnover ratio, and turnover volatility), the higher stock index return in developing countries. Conversely, the market liquidity (trading volume, turnover ratio, turnover volatility) corresponds negatively with return in the developed countries. During the crisis, however, the relationship between market liquidity and return show mixed results. While trading volume and turnover stays positive, yet the other liquidity measures become insignificant. In particular, for developed countries, only Amihud significantly affects return. Our results are robust even after controlling dividend yield, exchange rate, and regional stock market beta.
Contribution/ Originality
This study contributes to the literature of asset pricing by investigating the relationship between stock indexes return in the emerging countries as well as in the developed countries and market liquidity, as proxied by multiple types of measures such as (turnover, trading volume, turnover SD ratio, and Amihud (2002) Illiquidity).
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  4. Baker, M. and J.C. Stein, 2004. Market liquidity as a sentiment indicator. Journal of Financial Markets, 7(3): 271-299.
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Koreas Inpayments and Outpayments with the Rest of the World: Is There Room for Currency Manipulation?


Pages: 12-32
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Koreas Inpayments and Outpayments with the Rest of the World: Is There Room for Currency Manipulation?

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DOI: 10.18488/journal.aefr/2015.5.1/102.1.12.32


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Mohsen Bahmani-Oskooee --- Ruixin Zhang 
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Mohsen Bahmani-Oskooee --- Ruixin Zhang  (2015). Koreas Inpayments and Outpayments with the Rest of the World: Is There Room for Currency Manipulation?. Asian Economic and Financial Review, 5(1): 12-32. DOI: 10.18488/journal.aefr/2015.5.1/102.1.12.32
In estimating the well-known Marshall-Lerner condition, researchers have used trade volume data between one country and rest of the world. To reduce aggregation bias in these studies, it is proposed to use trade data at commodity level. However, due to lack of import and export prices to obtain trade volume at commodity level, researchers have used trade values instead. These value models are used to assess the direct impact of currency depreciation on inpayments and outpayments of an industry. In this paper we assess the sensitivity of inpayments and outayments of 148 Korean industries that trade with the rest of the world. We were able to identify 20 Korean exporting industries and 38 importing industries that will benefit from won depreciation in the long run.     
Contribution/ Originality

  1. Agbola, F.W. and M.Y. Damoense, 2005. Time-Series estimation of import demand functions for in India. Journal of Economic Studies, 32: 146-157.
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  6. Bahmani-Oskooee, M. and Z. Ardalani, 2006. Exchange rate sensitivity of US trade flows: Evidence from industry data. Southern Economic Journal, 72: 542-559.
  7. Bahmani-Oskooee, M., C. Economidou and G.G. Goswami, 2005. How sensitive are Britain’s inpayments and outpayments to the value of the British pound? Journal of Economic Studies, 32: 455-467.
  8. Bahmani-Oskooee, M. and A. Gelan, 2009. How stable is the demand for money in African countries. Journal of Economic Studies, 36: 216-235.
  9. Bahmani-Oskooee, M. and G. Goswami, 2004. Exchange rate sensitivity of Japan's bilateral trade flows. Japan and the World Economy, 16: 1-15.
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  12. Bahmani-Oskooee, M. and S. Hegerty, 2010. The J- and S-curves: A survey of the recent literature. Journal of Economic Studies, 37: 580-596.
  13. Bahmani-Oskooee, M. and S.W. Hegerty, 2007. Exchange rate volatility and trade flows: A review article. Journal of Economic Studies, 34: 211-255.
  14. Bahmani-Oskooee, M. and O. Kara, 2005. Income and price elasticities of trade: Some new estimates. International Trade Journal, 19: 165-178.
  15. Bahmani-Oskooee, M. and F. Niroomand, 1998. Long-run price elasticities and the marshall-lerner condition revisited. Economics Letters, 61: 101-109.
  16. Bahmani-Oskooee, M. and A. Ratha, 2008. Exchange rate sensitivity of US bilateral trade flows. Economic Systems, 32: 129-141.
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The Capital Investment Increases and Stock Returns


Pages: 1-11
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The Capital Investment Increases and Stock Returns

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Jung Fang Liu --- Nicholas Rueilin Lee --- Yih-Bey Lin --- Zang-Po Hong
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Jung Fang Liu --- Nicholas Rueilin Lee --- Yih-Bey Lin --- Zang-Po Hong (2015). The Capital Investment Increases and Stock Returns. Asian Economic and Financial Review, 5(1): 1-11. DOI: 10.18488/journal.aefr/2015.5.1/102.1.1.11
This paper applies free cash flow and information asymmetry hypotheses to investigate whether managers pursuit their private benefits by using capital investment expenditure (hereafter CI) increases or not, and to explore whether managers decrease CI as more dividend payments under information asymmetry hypothesis. Consequently, the present study investigates the effect of CI increases on abnormal stock returns of Taiwanese listed firms. The empirical results show that during full period and the post financial tsunami period, the effects of an increase in CI on stocks returns are positive, and the CI-spread is negative. This supports the hypothesis of information asymmetry. However, in the electronics industry during the entire study period and the post financial tsunami period, the expenditure of low CI tends to support free cash flow hypothesis but that of high CI supports the hypothesis of information asymmetry.
Contribution/ Originality
The paper’s primary contribution is that during full period and the post financial tsunami period, the effects of an increase in capital investment expenditure (CI) on stocks returns are positive, and the CI-spread is negative.
  1. Cheng, Y.T., 2001. The factor discussion of market reaction influence in the CI declaration. Working paper. Graduate Institute of Business Administration. National Chung Cheng University.
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  4. Fama, E.F. and K.R. French, 1993. Common risk factors in the returns on stocks and bonds. Journal of Financial Economics, 33(1): 3-56.
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